TJC 2023 H2 Economics compiled answers Papers 1 and 2

2023 JC2 H2 Economics TJC Prelims Suggested Answers 1 Question 1: The Future of Food in Singapore Suggested answers (a) Using the marginalist principle, explain why a rational working adult would choose to purchase food via UberEats. [3] ● The marginalist principle involves the weighing of the marginal benefit (MB) and marginal cost (MC) in the pursuit of self-interest, which is to maximise utility in the case of a consumer. ● The MB is the utility such as the convenience gain ed from consuming an additional unit of food delivery services. [1] ● The MC is the additional cost such as platform fee s incurred from the consumption of an additional unit of food delivery services. [1] ● In the scenario where the MB is greater than MC, a rational working adult would choose to purchase food via UberEats in order to maximize his utility. [1] (b) Given how “customers are just used to the conve nience now” (Extract 2), explain how the price elasticity of demand for food delivery services has changed during the pandemic. [3] Linking extract evidence and PED [2m] ● “Customers are just used to the convenience now” s uggests that the degree of necessity [1] is increasing as customers grow accustomed to ordering catalysed by the pandemic as well. ● Hence, consumers will be less responsive to price changes and quantity demanded will fall less than proportionately to a price increase. [1] Change in PED [1m] ● Demand becomes more price inelastic OR |PED| becom es less than 1. [1] (c) (i) Explain why there is allocative inefficienc y in the market for food delivery services. [4] ● In the consumption of food delivery services, cons umers only consider their private costs, such as the cost of the delivery and the private benefits, such as the convenience provided by the delivery services. [1] OR ● In the production of food delivery services, produ cers only consider their private costs, such as the marginal cost of production which includes the cost of labour and their private benefits which is the additional revenue a producer earns fr om producing one more unit of food delivery service. [1] ● They ignore external costs such as the healthcare costs borne by pedestrians who inhale the transport emissions leading to health issues. [1] ● The presence of marginal external costs creates a divergence between the marginal social cost (MSC) and marginal private cost (MPC) where MSC > MPC. ● Left to the free market, producers produce their p rivate optimal quantity, Qp where marginal private benefit (MPB) = MPC. However, the social optimal level of production is at Qs where MSb=MSC. Since Qp>Qs, there is overproduction of food delivery services. [1] ● From Qp to Qs units, the total social costs (area QsacQp) exceeds the total social benefits (area QsabQp) leading to a deadweight loss of area abc. Hence, there is allocative inefficiency in the market for food delivery services. [1]

2023 JC2 H2 Economics TJC Prelims Suggested Answers 2 (ii) With reference to Extract 3, explain how the establishment of cloud kitchen addresses allocative inefficiency in food delivery services. [2] Identifying the relevant case material or showing the understanding that cloud kitchen reduces delivery distance [1m] ● In Extract 3, it was stated that the “more kitchen s that share a location, the greater the chances of a rider consolidating several orders to the same area, which would reduce the delivery miles per meal”. [1] Analysis [1m] ● This means that the establishment of cloud kitchen s help to reduce greenhouse emissions and reduce MEC, which will reduce the overconsumpti on/overproduction and hence allocative inefficiency in food delivery services. [1] (d) With reference to Extract 4, discuss the effect iveness of the policies implemented by the Singapore government to improve food security. [8] Question Interpretation Command word/phrase Discuss This question requires students to present a balanced analysis by analysing how policies implemented by the Singapore government may or may not be effective in improving food security using the O-W-L framework before coming to a well-reasoned judgement by comparing the benefits and costs of both policies. Content Effectiveness of the policies Food Security Through increasing the supply of food through subsidies or by decreasing food waste by reducing the demand for food through education policies. Food security – access to safe and nutritious food. This would require a descriptive link after the economic analysis above.

2023 JC2 H2 Economics TJC Prelims Suggested Answers 3 Context Singapore (Extract 4) Make reference to the case (Extract 4) and apply analysis to the context of Singapore. Students are required to consider two different pol icies implemented by the government to improve food security and their limitations. A demand-side and a supply-side policy should be explained for greater scope. The evaluation entails a judgement on the extent to which these policies would be effective for Singapore. Introduction ● [Outline approach] As mentioned in Extract 4, food security can be defined as the access to safe and nutritious food. In an attempt to impro ve food security, the Singapore government has implemented both supply-side policies such as subsidies for local produce as well as demand-side policies such as education c ampaigns on food waste. This essay will seek to discuss the effectiveness of the above-mentioned policies. Body Thesis 1a: Explain how subsidies for local produce can improve food security and its limitations. ● Subsidising local produce can help Singapore to improve food security. ● As mentioned in Extract 4, the Singapore governmen t has provided a grant to support local farmers to ramp up local production of eggs, vegetables and fish. ● This will lower the cost of production of local fa rmers and increase profitability, leading to an increase in their willingness and ability to pro duce food. Supply increases and supply curve shifts rightwards from S1 to S2. ● At the original price P1, there is a surplus of Qs -Q1. This leads to a downward pressure on price. As prices fall, quantity demanded increases and quantity supplied increases until the new equilibrium where Qd=Qs is reached. Equilibrium quantity has increased from Q1 to Q2. ● Since the quantity of domestic produce has increas ed, this will provide an alternative source of food and allow Singaporeans to continue enjoying access to safe and nutritious food, improving food security. Limitations ● However, these subsidies are costly and would stra in the government budget as seen in Extract 4 where the grant will cost a hefty 30 mill ion dollars. In addition, opportunity costs such as welfare gains from spending on other areas such as education would also be incurred. As such, the government may be unable to sustain the policy for a prolonged period of time and food security may worsen again when these subsidies are removed. ● Considering Singapore’s limited land size, local p roduce may not increase substantially even with the subsidies due to the constraint of sp ace. As such, this is unlikely to impact Singapore’s food security significantly.

2023 JC2 H2 Economics TJC Prelims Suggested Answers 4 Thesis 1b: Explain how education campaigns to reduce food wastage can improve food security and its limitations. ● Education campaigns can he